Trade Example – USD/CAD Daily Chart

Filed under: Learn Forex Trading |

There is not a lot to tell you about with regards to the live trades, as I have not put any orders in so far this month. I am taking a more cautious approach this month after the drawdown we had in January and only taking any trades with the current trend and momentum. The protection of your bank should always be your number one priority, and since we are down by just over 3% at the moment, it is vital that we get back into profits before thinking about taking any contrarian trades (trades going against the trend). Therefore, since I have no live trade results as such, I would like to take you through a simple trade setup on the USD/CAD forex currency pair.

 

We did not take this setup as we already had a live trade on the 4-hour chart for the USD/CAD, which incidentally was successful. However, this is an equally valid setup, and had we missed the 4-hour engulfing pattern, we could have traded off of this setup instead.

Figure 1.

To begin with, take a look at Figure 1, which is the daily chart for the USD/CAD pair. As you can see, there is a nice, long bearish pin bar coming off a support/resistance level (marked with a green band). It is also piercing the 8-day EMA, so it is coming off a value area. We could have gone short here at a 50% retracement of the pin bar, with a stop loss just a few pips above the high of the move, and a target of two times our risk.

 

Figure 2.

Figure 2 shows that the trade would have been successful, for a very straightforward trade. This is a great example of how you can get in on a trend and ride it. That’s it for today – more tomorrow.

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